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USD/CAD Bulls Are Running Out of Momentum Above 1.3000

May 11, 2022

Talking Points:

  • USD/CAD trades sideways after regaining an 18-month high and testing a four-day upswing.
  • The immediate gain is being challenged by an overbought relative strength index (RSI) and a monthly resistance line.
  • Bears remain wary above the 200-day simple moving average (SMA), but weekly support holds the key to a short-term drop.

During today’s early Asian trading session, USD/CAD bulls take a breather around the 18-month high, holding around 1.3030.

The recent pause in the loonie pair tests the four-day rise that took it to its highest levels since November 2020.

The overbought RSI, however, prevents USD/CAD bulls from breaking through a one-month-old rising trend line barrier, which was at 1.3045 at the time of publishing.

If the pair ignores technicals and rallies past 1.3045, a challenge to the mid-November 2020 high of around 1.3175 isn’t out of the question.

Meanwhile, a one-week rising trend line, close to 1.3015, precedes the psychological magnet of 1.3000, limiting the USD/CAD’s immediate downside.

The 50-day SMA and an upward sloping trend line from the 21st of April also serve as short-term vital support around 1.2875 and 1.2815, respectively.

It’s worth mentioning that the 200-day SMA level of around 1.2660 serves as the USD/CAD bulls’ last line of defence if the pair falls below 1.2815.

USD/CAD Four-Hour Chart:

 

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